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Incomes go up, poverty remains

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Bulgaria is the poorest country in the European Union and Bulgarians are the poorest nation in the bloc. This is hardly any news at all. What is surprising though is that today Bulgaria is among the EU countries with the fastest rates of income growth – more than 10 percent annually. While in March 20 percent of households earned incomes per household member below 100 euro, in December this share has shrunk twofold – to 10 percent. Few countries in the European Union can boast of such achievements. The problem with low incomes though remains because a growth rate of 10 percent on a monthly income of 400 euro is hardly a tangible increase of the buying capacity. Here is an example – the prices of tap water in 14 Bulgarian regions will be 20 percent up from 1 January and now compensations are mulled for those users who might be unable to pay for something as basic as drinking water!

Again from 1 January 2018 the minimum monthly salary in the country is up from 230 to 257 euroand this monthly salary will now be paid to close to half a million Bulgarians from the total of 2.3 million employed. In France the minimum monthly salary becomes 1500 euro. In 2018 the poverty line in Bulgaria becomes 162 euro, up from 158 euro this year. The average monthly salary in the country stands at 550 euro and the average pension – at 175 euro per month.

These are a few telling figures which show that the incomes of Bulgarians are more than modest. Well, this fact is indisputable although last week during the last Council of the EU for 2017 Bulgaria was praised for its financial indices – according to Prime Minister Boyko Borissov. Public finances may look pretty well but the resources of Bulgarian households are worryingly scarce and this puts under threat the growing economy of the country.

One of the latest United Nations surveys defines Bulgaria as a developed but poor country. Eurostat in turn has placed the country second across the EU as per the share of the population at risk of poverty and social exclusion.

The regular rise of incomes in Bulgaria is above all due to the growth rate of Bulgarian economy in the last 2 to 3 years which has reached 4 percent this year. This however won’t last long, economists warn: they have already detected signs of running out of the potential for growth of the national economy which is nearing its natural ceiling. The main threat comes from the increasingly tangible shortage of qualified workers and also from the incessant emigration wave. In fact these two phenomena are related because most emigrants are qualified workers or university students. And an economy cannot move forward without a capable workforce.

To make things worse, the Bulgarian population is ageing fast – the relative share of retired people has been growing out of proportion. They neither produce nor consume enough because of their humiliatingly low pensions. Last summer the country saw an attempt at importing workers for tourism but this is hardly a long term solution because the Bulgarian economy badly needs workers not only in the summer but all year round. Such measures look hopeless because given the low wages a competent foreigner would hardly be willing to work in Bulgaria.

The Bulgarian authorities are well aware of all this but have repeatedly stated that they do what they can and the problem is with private businesses who do not pay their workers enough. This may be true but it is also true that at a moment when the national revenue looks pretty healthy and the budget for next year is 1.26 billion euro up, there is a way to raise the incomes of employees in the public sector and of pensioners who make up for close to 40 percent of the population. This will inevitably push the private sector to carry out pay rises. Such a chain reaction will generate new incentives to the Bulgarian economy so that poverty is played down and the country moves closer to European living standards. There is money for such a move but it is also a matter of political priorities and strategic goals.

English Daniela Konstantinova




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